World of Warcraft 2.0: IRS Offices Patched into Ogrimmar and Ironforge

By consumerist.comJanuary 6, 2006

There are lots of taxes one pays in online games. They can be taxing to the marriages, health and even the sanity of emaciated South Korean nerds slowly irradiated into a shade of phosphorescent blue, like a deep-sea inverterbrate, by their112-hour binges in front of a monitor flickering Lineage mobs upon their retinas. And any World of Warcraft player knows that it can be taxing upon your intellect as well: being forced to endure the general chat channel of the Barrens will slough IQ points off like reams of skin after a first-degree sunburn.

JUNE 2003. I SET MYSELF THE FOLLOWING CHALLENGE, posting it on my web log for the world to see: “On April 15, 2004, I will truthfully report to the IRS that my primary source of income is the sale of imaginary goods
and that I earn more from it, on a monthly basis, than I have ever earned as a professional writer.”

In the course of this project, I made a total of $11,000 selling on eBay the items I won playing a game called Ultima Online, $3,900 of which was in the final, most profitable month. I reported my profit to the IRS, and I paid the requisite taxes. But after I did so, a troublesome set of questions continued to nag at me
for which even IRS publication 525, entitled “Taxable and Nontaxable Income,” couldn’t provide answers.

This was remarkable, for publication 525 would appear to contain every conceivable form of income known to accounting. To read it once is to realize that you know nothing about income. Here you’ll find a description of gains, ill-gotten and otherwise, so irregular that they can be taxed only according to that form of guesswork known as fair market value. Here are stocks, options, retirement watches, and stolen goods (“If you steal property, you must report its fair market value in your income in the year you steal it unless in the same year, you return it to its rightful owner”).